It might not look right or even sound right, the words “Obama administration fires GM CEO Rick Wagoner” but that is, in effect, what happened. And if you know anything about me you know that I have a resolved and absolute dissatisfaction with Barack Obama as a president.
So it goes without saying that I am shocked and upset by this move, announced over the weekend and discussed by Mr. Obama this morning at a press conference he held to bring forward news of the government’s plans and actions toward the failing American automotive industry. The first question I have to ask is how can a government flex that much muscle that it can ouster a corporate officer of one of the largest companies in American history, a company they have no stake in, in such a short period of time when it took a court order and a subpoena to get the names of the recipients of the bonuses awarded to AIG executives, a company that the government owns 80% of?
Let me be clear about one thing: I am not saying that CEO Rick Wagoner should not have been fired. To the contrary, given his performance and lack of strength exhibited over his tenure at the helm of GM it makes sense that the company should seek to replace him. But that is the company’s own prerogative, not that of the US government. Just because the government is lending GM (in total) about $20 billion does not mean that they can reach into the corporation and start shifting the organization around.
No, in fact I would have expected that in the case of banks and financial institutions that have been pissing away the hundreds of billions of dollars in taxpayer money that was used to nationalize those banks. The government took ownership of the bulk of the companies and should, in effect, have ownership rights to that company, including making organization decisions. Why we didn’t exercise those ownership rights still blows me away as I watch the financial sector continue to retain people that brought our country to its knees by paying them the same amounts of money, if not more, to do the same thing. Where are the bank CEOs’ heads? Where are the calls for resignations of Mr. Liddy from AIG? Where is the government muscle in that industry?
Instead GM, who does need the money – there is no doubt about that, is told their plan for looking forward and righting their ship was not sufficient in the eyes of the government and that, in order for them to be in a place where the government will trust them with more, must bounce their CEO. Chrysler was not given that same decision? Why not?
Now GM has another 60 days to revise their plan so that they can borrow more money from the government. And Chrysler has 30 days to get their merger/partnership deal with Fiat put together in a way that is adequate to the government so that the government can give them another $6 billion. Oh, and if the deal with Fiat falls through then Chrysler will receive no more money from the government. But that’s fine because Mr. Obama has a plan for that.
See, if it doesn’t work out for Chrysler then Mr. Obama has suggested that using American bankruptcy laws might be a potential solution for Chrysler as a means to release their liability for older, heavier debt that they can’t seem to get themselves out from under as a corporation. Um, Mr. President? If bankruptcy were an option for them why the hell didn’t we let them file two months ago instead of giving them money just so they could ask for more two months later?
It would seem the only smart company of the big 3 was Ford who elected not to take any government bailout funds. So while the government is firing CEOs and forcing partnerships Ford can sit back and look like the only stable company of the three. Way to go Ford. I have not really ever liked anything about you, but this little gesture of yours… top class.
Too bad the weakening auto industry will have a catastrophic domino effect on the entire economy if it does fail. Vendors and suppliers that supply GM and Chrysler more than likely supply other automotive manufacturers. And since the manufacturers have forced suppliers to scant profit margins, at best, if a supplier loses a contract like GM they could very well go out of business. Meaning Toyota, Honda, Mitsubishi and many other manufacturers not in the news for failure will be directly affected by GM and Chrysler’s inability to manage their business.
When will the auto industry learn from Toyota? When will they take what Toyota has done seriously and implement the principles of kaizen, hoshin kanri and 5S? That is perhaps for a different discussion.
For now I am still a little flabbergasted by the way our new presidential administration has failed to act like business owners for businesses we own while acting like a corporate boards toward companies we have no ownership interest in at all. If they fired Wagoner, they could have very easily fired all the idiots at all the banks that have brought our economy into the toilet and gotten rid of their bad business decisions before giving them billions of dollars to make more bad decisions with.
But that really isn’t Obama’s way now, is it?